SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
================
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2000
------------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ________ to ________
Commission file number 0-29312
MONTGOMERY FINANCIAL CORPORATION
(Exact Name of Small Business Issuer in its Charter)
Indiana 35-1962246
------- ----------
(State or other jurisdiction of (I.R.S. Employer Identification Number)
Incorporation or organization)
119 East Main Street
Crawfordsville, Indiana 47933
----------------------- -----
(Address of Principal Executive Offices) (Zip Code)
(765) 362-4710
--------------
(Registrant's telephone number, including area code)
Check here whether the issuer (1) has filed all reports required to be
filed by Section 13 or 15 (D) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements for the past
90 days. Yes [X] No [ ]
As of October 31, 2000, there were 1,244,790 shares of the Registrant's
---------------- ---------
common stock issued and outstanding.
<PAGE>
MONTGOMERY FINANCIAL CORPORATION AND SUBSIDIARY
Crawfordsville, Indiana
Form 10-QSB
Index
Page No.
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PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Condensed Statement of Financial Condition
As of September 30, 2000 and June 30, 2000 3
Consolidated Condensed Statement of Income for the Three
Months Ended September 30, 2000 and 1999 4
Consolidated Condensed Statement of Cash Flows for the
Three Months Ended September 30, 2000 and 1999 5
Consolidated Condensed Statement of Stockholders'
Equity for the Three Months Ended September 30, 2000 7
Notes to Consolidated Condensed Financial Statements 8
Item 2. Management's Discussion and Analysis of Financial Condition
And Results of Operations 9
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 14
Item 2. Changes in Securities and Use of Proceeds 14
Item 3. Defaults Upon Senior Securities 14
Item 4. Submission of Matters to a Vote of Security Holders 14
Item 5. Other Information 14
Item 6. Exhibits and Reports on Form 8-K 14
Signatures 15
<PAGE>
<TABLE>
<CAPTION>
MONTGOMERY FINANCIAL CORPORATION AND SUBSIDIARY
Crawfordsville, Indiana
Consolidated Condensed Statement of Financial Condition
(Unaudited)
September 30, June 30,
2000 2000
------------ ------------
Assets
<S> <C> <C>
Cash $ 1,087,298 $ 394,392
Short-term interest-bearing deposits 11,858,218 10,131,874
------------ ------------
Total cash and cash equivalents 12,945,516 10,526,266
Interest-bearing deposits 239,313 258,689
Investment securities available for sale 588,945 443,917
Loans 119,202,948 119,356,784
Allowance for loan losses (226,000) (226,000)
------------ ------------
Net loans 118,976,948 119,130,784
Premises and equipment 3,234,063 3,236,258
Federal Home Loan Bank stock 1,893,300 1,893,300
Foreclosed assets and real estate held for development, net 1,570,298 1,301,996
Interest receivable 908,955 951,010
Other assets 361,256 380,038
------------ ------------
Total assets $140,718,594 $138,122,258
============ ============
Liabilities
Deposits
Noninterest bearing $ 2,426,452 $ 2,580,192
Interest bearing 96,203,620 88,926,339
------------ ------------
Total deposits 98,630,072 91,506,531
Federal Home Loan Bank advances 23,241,258 28,241,258
Interest payable 679,637 534,341
Other liabilities 1,051,532 859,417
------------ ------------
Total liabilities 123,602,499 121,141,547
------------ ------------
Stockholders' Equity
Preferred stock, $.01 par value
authorized and unissued--2,000,000 shares
Common stock, $.01 par value--8,000,000 shares
authorized; 1,244,790 issued 12,448 12,448
Paid-in capital 10,173,769 10,176,190
Retained earnings - substantially restricted 8,145,439 8,102,308
Unearned ESOP shares (1,034,576) (1,055,482)
Unearned compensation (188,706) (199,633)
Accumulated other comprehensive income (loss) 7,721 (55,120)
------------ ------------
Total stockholders' equity 17,116,095 16,980,711
------------ ------------
Total liabilities and stockholders' equity $140,718,594 $138,122,258
============ ============
</TABLE>
See Notes to Consolidated Condensed Financial Statements.
<PAGE>
<TABLE>
<CAPTION>
MONTGOMERY FINANCIAL CORPORATION AND SUBSIDIARY
Crawfordsville, Indiana
Consolidated Condensed Statement of Income
(Unaudited)
Three Months Ended
September 30,
----------------------------------
2000 1999
---------- ----------
Interest and Dividend Income
<S> <C> <C>
Loans $2,360,812 $2,237,377
Investment securities 5,518 7,546
Deposits with financial institutions 197,366 97,282
Federal Home Loan Bank stock 40,453 29,044
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Total interest and dividend income 2,604,149 2,371,249
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Interest Expense
Deposits 1,327,277 1,050,996
Federal Home Loan Bank advances 408,418 320,936
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Total interest expense 1,735,695 1,371,932
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Net Interest Income 868,454 999,317
Provision for losses on loans
---------- ----------
Net Interest Income After
Provision for Losses on Loans 868,454 999,317
---------- ----------
Other Income
Service charges on deposit accounts 15,910 13,814
Loss on sale of available for sale securities (535)
Real estate operations, net 6,203 5,701
Other income 13,957 8,230
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Total other income 35,535 27,745
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Other Expenses
Salaries and employee benefits 419,186 366,322
Net occupancy expense 46,910 42,688
Equipment expense 55,666 60,819
Data processing expense 43,911 50,735
Deposit insurance expense 4,649 12,349
Advertising expense 20,173 25,144
Other expenses 151,735 155,418
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Total other expenses 742,230 713,475
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Income Before Income Tax 161,759 313,587
Income tax expense 54,885 122,225
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Net Income $ 106,874 $ 191,362
========== ==========
Net Income Per Share
Basic $ 0.10 $ 0.14
Diluted 0.10 0.14
Dividends Per Share 0.055 0.055
</TABLE>
See Notes to Consolidated Condensed Financial Statements.
<PAGE>
<TABLE>
<CAPTION>
MONTGOMERY FINANCIAL CORPORATION AND SUBSIDIARY
Crawfordsville, Indiana
Consolidated Condensed Statement of Cash Flows
(Unaudited)
Three Months Ended
September 30,
-----------------------------------
2000 1999
----------- -----------
Operating Activities
<S> <C> <C>
Net income $ 106,874 $ 191,362
Adjustments to reconcile net income to net cash
provided by operating activities
Depreciation 76,376 78,590
Loss on sale of securities available for sale 535
ESOP stock amortization 19,324 20,967
Amortization of unearned compensation 10,088 5,768
Change in
Interest receivable 42,055 (77,740)
Interest payable 145,296 (1,456)
Other assets 18,782 43,429
Other liabilities 150,897 289,676
----------- -----------
Net cash provided by operating activities 570,227 550,596
----------- -----------
Investing Activities
Net change in interest bearing deposits 19,376
Proceeds from sale of securities
available for sale 8,495
Purchase of securities available for sale (50,000)
Net change in loans (163,104) (3,219,217)
Additions to real estate owned and held for investment (55,173) (68,144)
Proceeds from real estate owned sales 94,742 70,520
Purchases of premises and equipment (65,111) (227,986)
Purchase of FHLB of Indianapolis stock (400,000)
----------- -----------
Net cash used by investing activities (210,775) (3,844,827)
------------ ------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
MONTGOMERY FINANCIAL CORPORATION AND SUBSIDIARY
Crawfordsville, Indiana
Consolidated Condensed Statement of Cash Flows
(Continued)
Three Months Ended
September 30,
-----------------------------------
2000 1999
----------- -----------
Financing Activities
<S> <C> <C>
Net change in
Noninterest-bearing, interest-bearing demand and
savings deposits $ 651,868 $ 2,653,592
Certificates of deposit 6,471,673 646,443
Proceeds from FHLB advances 5,000,000
Repayment of FHLB advances (5,000,000) (2,054,458)
Stock purchase (1,630,436)
Dividends paid (63,743) (77,385)
----------- -----------
Net cash provided by financing activities 2,059,798 4,537,756
----------- -----------
Net Change in Cash and Cash Equivalents 2,419,250 1,243,525
Cash and Cash Equivalents, Beginning of Period 10,526,266 4,932,813
----------- -----------
Cash and Cash Equivalents, End of Period $12,945,516 $ 6,176,338
=========== ===========
Additional Cash Flow and Supplementary Information
Interest Paid $ 1,590,399 $ 1,373,388
Income Tax Paid 102,000 30,655
Transfer from Loans to Other Real Estate Owned 316,941
Cash Dividends Payable 62,659 68,587
</TABLE>
See Notes to Consolidated Condensed Financial Statements.
<PAGE>
<TABLE>
<CAPTION>
MONTGOMERY FINANCIAL CORPORATION AND SUBSIDIARY
Crawfordsville, Indiana
Consolidated Condensed Statement of Stockholders' Equity
(Unaudited)
Common Stock
-------------------- Accumulated
Other
Comprehen- Unearned Comprehensive
Paid-in sive Retained Unearned Compensa- Income
Shares Amount Capital Income Earnings ESOP Shares tion (Loss) Total
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Balance July 1, 2000 1,244,790 $12,448 $10,176,190 $8,102,308 $(1,055,482) $(199,633) $(55,120) $16,980,711
Net income for the three
months ended
September 30, 2000 $106,874 106,874 106,874
Other comprehensive income,
net of tax
Unrealized gain on
securities 62,841 62,841 62,841
--------
Other comprehensive income $169,715
========
Cash dividends ($.055 per
share) (63,743) (63,743)
ESOP shares earned (1,582) 20,906 19,324
Amortization of unearned
compensation expense (839) 10,927 10,088
-----------------------------------------------------------------------------------------------------------------------------------
Balance September 30, 2000 1,244,790 $12,448 $10,173,769 $8,145,439 $(1,034,576) $(188,706) $ 7,721 $17,116,095
===================================================================================================================================
</TABLE>
See Notes to Consolidated Condensed Financial Statement.
<PAGE>
MONTGOMERY FINANCIAL CORPORATION AND SUBSIDIARY
Crawfordsville, Indiana
Notes to Consolidated Condensed Financial Statements
Basis of Presentation
The unaudited interim consolidated condensed financial statements include the
accounts of Montgomery Financial Corporation ("Montgomery"), its subsidiary,
Montgomery Savings, A Federal Association (the "Association") and its
subsidiary, MSA SERVICE CORP.
The unaudited interim consolidated condensed financial statements have been
prepared in accordance with the instructions to Form 10-QSB and, therefore, do
not include all information and disclosures required by generally accepted
accounting principles for complete financial statements. In the opinion of
management, the financial statements reflect all adjustments necessary to
present fairly Montgomery's financial position as of September 30, 2000, results
of operations for the three month periods ended September 30, 2000 and 1999, and
cash flows for the three month periods ended September 30, 2000 and 1999. The
results of operations for the three month period ended September 30, 2000 are
not necessarily indicative of the results of operations which may be expected
for the fiscal year ending June 30, 2001.
Net Income Per Share
Net income per share for the three month periods ended September 30, 2000 and
1999, are computed by dividing net earnings by the weighted average shares of
common stock outstanding during the period.
<TABLE>
<CAPTION>
For the Three Months Ended September 30, 2000 September 30, 1999
------------------ ------------------
Weighted Per Weighted Per
Average Share Average Share
Income Shares Amount Income Shares Amount
------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
Basic Net Income Per Share:
Net Income Available
to Common Stockholders $ 106,874 1,111,593 $ 0.10 $ 191,362 1,369,146 $ 0.14
========= =========
Effect of Dilutive Stock
Options and Grants 0 9,675 0 10,146
--------- --------- ---------- ---------
Diluted Net Income Per Share:
Net Income Available
To Common Stockholders $ 106,874 1,121,268 $ 0.10 $ 191,362 1,379,292 $ 0.14
========= ========= ========= ========== ========= =========
</TABLE>
<PAGE>
MONTGOMERY FINANCIAL CORPORATION AND SUBSIDIARY
Crawfordsville, Indiana
Item 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Forward-Looking Statements. When used in this Form 10-QSB or future filings
by Montgomery with the Securities and Exchange Commission, in Montgomery's press
releases or other public shareholder communications, or in oral statements made
with the approval of an authorized executive officer, the words or phrases,
"will likely result", "are expected to", "will continue", "is anticipated",
"estimate", "project", "believe", or similar expressions are intended to
identify "forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995. Montgomery wishes to caution readers
not to place undue reliance on any such forward-looking statements, which speak
only as of the date made, and to advise readers that various factors, including
regional and national economic conditions, changes in levels of market interest
rates, credit risks of lending activities, and competitive and regulatory
factors, could affect Montgomery's financial performance and could cause
Montgomery's actual results for future periods to differ materially from those
anticipated or projected. Montgomery does not undertake, and specifically
disclaims any obligation, to revise any forward-looking statements to reflect
the occurrence of anticipated or unanticipated events or circumstances after the
date of such statements.
Financial Condition. Montgomery's total assets were $140.7 million at
September 30, 2000, an increase of $2.6 million, or 1.9 percent from June 30,
2000. During this three month period interest-earning assets increased $1.7
million, or 1.6 percent. Short-term interest-earning deposits increased $1.7
million, or 17.0 percent. Loans decreased $154,000, or 0.1 percent. Foreclosed
assets and real estate held for development increased $268,000, or 20.6 percent.
Deposits increased $7.1 million, or 7.8 percent, primarily due to an increase in
public funds deposits and FHLB advances decreased $5.0 million, or 17.7 percent,
causing a net increase in interest-bearing liabilities of 1.9 percent. The
increase in deposits was primarily used to decrease FHLB advances.
Capital and Liquidity. At September 30, 2000, stockholders' equity was
$17.1 million or 12.2 percent of total assets, compared with stockholders'
equity of $17.0 million, or 12.3 percent, at June 30, 2000. The Association
continues to exceed all minimum regulatory capital requirements. At September
30, 2000, the Association's tangible and core capital was $15,327,000, or 10.9
percent of tangible assets, $13,147,000 in excess of the 1.5 percent minimum
required tangible capital and $9,662,000 in excess of the 4.0 percent minimum
required core capital. Risk-based capital equaled $14,713,000, or 16.9 percent
of risk-weighted assets, $7,760,000 more than the minimum 8.0 percent risk based
level required. The director of the OTS is required to set minimum liquidity
levels between four and 10 percent of assets. Current regulations require a
minimum liquidity level of four percent. The Association's average liquidity
ratio for the three months ended September 30, 2000, was 8.5 percent.
MONTGOMERY FINANCIAL CORPORATION AND SUBSIDIARY
Crawfordsville, Indiana
Asset/Liability Management. The Association, like other financial
institutions, is subject to interest rate risk to the extent that its
interest-bearing liabilities reprice on a different basis than its
interest-bearing assets. The OTS issued a regulation which provides a Net
Portfolio Value ("NPV") approach to the quantification of interest rate risk. In
essence, this approach calculates the difference between the present value of
liabilities, expected cash flows from assets and cash flows from off balance
sheet contracts. Under this OTS regulation, an institution's "normal" level of
interest rate risk in the event of an assumed change in interest rates is a
decrease in the institution's NPV in an amount not exceeding 2 percent of the
present value of its assets. Under the regulation, thrift institutions with
greater than "normal" interest rate exposure must take a deduction from their
total capital available to meet their risk-based capital requirement. The amount
of that deduction is one-half of the difference between (a) the institution's
actual calculated exposure to the 200 basis point interest rate increase or
decrease (whichever results in the greater pro forma decrease in NPV) or (b) its
"normal" level of exposure which is 2% of the present value of its assets. The
regulation does exempt all institutions under $300 million in assets with
risk-based capital above 12 percent from reporting information to the OTS to
calculate exposure and making any deduction from risk-based capital. At
September 30, 2000 the Association's total assets were $140.7 million and risk
based capital was 16.9 percent; therefore the Association would have been exempt
from calculating or making any risk-based capital reduction. Montgomery's
management, however, believes interest-rate risk is an important factor and
makes all reports necessary to OTS to calculate interest-rate risk on a
voluntary basis. At June 30, 2000, the most recent date for which information is
available from the OTS, 2.0% of the present value of the Association's assets
was approximately $2.75 million, which was less than $4.22 million, the greatest
decrease in NPV resulting from a 200 basis point change in interest rates. As a
result, the Association, for OTS reporting purposes, would have been required to
make a deduction from total capital in calculating its risk-based capital
requirement had this rule been in effect and had the Association not been exempt
from reporting on such date. Based on June 30, 2000 NPV information, the amount
of the Association's deduction from capital, had it been subject to reporting,
would have been approximately $730,000.
It has been and continues to be a priority of the Association's Board of
Directors and management to manage interest rate risk and thereby limit any
negative effect of changes in interest rates on the Association's NPV. The
Association's Interest Rate Risk Policy, established by the Board of Directors,
promulgates acceptable limits on the amount of change in NPV given certain
changes in interest rates. Specific strategies have included shortening the
amortized maturity of fixed-rate loans and increasing the volume of adjustable
rate loans to reduce the average maturity of the Association's interest-earning
assets. FHLB advances are used in an effort to match the effective maturity of
the Association's interest-bearing liabilities to its interest-earning assets.
Presented below, as of June 30, 2000 and June 30, 1999, is an analysis of
the Association's estimated interest rate risk as measured by changes in NPV for
instantaneous and sustained parallel shifts in interest rates, up and down 300
basis points in 100 point increments, compared to limits set by the Board.
Assumptions used in calculating the amounts in this table are those assumptions
utilized by the OTS in assessing the interest risk of the thrifts it regulates.
Based upon these assumptions at June 30, 2000, and June 30, 1999, the NPV of the
Association was $18.5 million and $19.8 million, respectively. NPV is calculated
by the OTS for the purposes of interest rate risk assessment and should not be
considered as an indicator of value of the Association.
<TABLE>
<CAPTION>
MONTGOMERY FINANCIAL CORPORATION AND SUBSIDIARY
Crawfordsville, Indiana
-------------------------------------------------------------------------------------------
At June 30, 2000 At June 30,1999
-------------------------------------------------------------------------------------------
Assumed Board
Change in Limit
Interest Rates % Change $ Change % Change $ Change % Change
(Basis Points) in NPV in NPV in NPV in NPV in NPV
-------------------------------------------------------------------------------------------
(Dollars in Thousands)
-------------------------------------------------------------------------------------------
<S><C> <C> <C> <C> <C> <C>
+300 -60 -6,421 -35 -6,573 -33
-------------------------------------------------------------------------------------------
+200 -50 -4,224 -23 -4,122 -21
-------------------------------------------------------------------------------------------
+100 -30 -2,011 -11 -1,809 -9
-------------------------------------------------------------------------------------------
0 0 0 0 0 0
-------------------------------------------------------------------------------------------
-100 -30 +1,367 +7 +1,166 +6
-------------------------------------------------------------------------------------------
-200 -50 +1,970 +11 +2,187 +11
-------------------------------------------------------------------------------------------
-300 -60 +2,685 +15 +3,329 +17
-------------------------------------------------------------------------------------------
</TABLE>
In the event of a 300 basis point change in interest rate based upon
estimates as of June 30, 2000, the Association would experience a 15% increase
in NPV in a declining rate environment and a 35% decrease in NPV in a rising
environment. During periods of rising rates, the value of monetary assets and
liabilities declines. Conversely, during periods of falling rates, the value of
monetary assets and liabilities increases. However, the amount of change in
value of specific assets and liabilities due to changes in rates is not the same
in a rising rate environment as in a falling rate environment (i.e., the amount
of value increase under a specific rate decline may not equal the amount of
value decrease under an identical upward rate movement). Based upon the NPV
methodology, the increased level of interest rate risk experienced by the
Association in recent periods was primarily due to the maturities of
interest-earning assets increasing more than the maturities on interest-bearing
liabilities due to the increase in fixed-rate residential mortgage loans and
non-residential loans.
Results of Operations. Montgomery's net income for the three months ended
September 30, 2000, was $107,000 compared to $191,000 for the three months ended
September 30, 1999, a decrease of $84,000. Net interest income decreased
$131,000, or 13.1 percent, primarily due to a decrease in interest rate spread
from 2.54 percent to 1.95 percent for the comparable periods. Average
interest-earning assets were $134.6 million with an average yield of 7.74
percent for the three months ended September 30, 2000 compared to $128.4 million
with an average yield of 7.73 percent for the 1999 period. Average
interest-bearing liabilities increased $14.2 million from $105.8 million to
$120.0 million during the comparable periods. The average cost of
interest-bearing liabilities increased from 5.19 percent to 5.78 percent. Net
interest margin decreased from 3.26 percent for the three months ended September
30, 1999 to 2.58 percent for the three months ended September 30, 2000.
Non-interest income was $36,000 for the 2000 three-month period compared to
$28,000 for the 1999 period. Non-interest expense was $742,000 for the three
months ended September 30, 2000 compared to $713,000 for the 1999 period, an
increase of $29,000, or 4.0 percent. Income before income tax was $162,000 for
the three months ended September 30, 2000, compared to $314,000 for the three
months ended September 30, 1999, a decrease of $152,000. Income tax for the
three months ended September 30, 2000, was $55,000 compared to $122,000 for the
three months ended September 30, 1999.
MONTGOMERY FINANCIAL CORPORATION AND SUBSIDIARY
Crawfordsville, Indiana
Interest Income. Montgomery's total interest income for the three months
ended September 30, 2000, was $2.6 million, an increase of $233,000, or 9.8
percent, compared to interest income for the three months ended September 30,
1999. This increase was primarily caused by an increase in average
interest-earning assets from $122.7 million for the three months ended September
30, 1999, to $134.6 million for the three months ended September 30, 2000, an
increase of $11.9 million, or 9.7 percent. Average loans increased from $112.6
million for the 1999 period to $119.3 million for the 2000 period, average
interest-earning deposits decreased from $7.7 million to $12.9 million and
average investment securities decreased from $897,000 to $486,000 for the
respective periods. The average yield on interest-earning assets was 7.74
percent for the three months ended September 30, 2000, compared to 7.73 percent
for the three months ended September 30, 1999.
Interest Expense. Interest expense for the three months ended September 30,
2000, was $1.7 million compared to $1.4 million for the 1999 period, an increase
of $364,000, or 26.5 percent. Average interest-bearing liabilities increased
$14.2 million, or 13.4 percent, from $105.8 million for the three months ended
September 30, 1999, to $120.0 million for the three months ended September 30,
2000. The average cost of funds increased from 5.19 percent to 5.78 percent for
the comparable periods and the average cost of deposits increased from 5.05
percent to 5.67 percent. In addition, the average rate on FHLB advances
increased from 5.68 percent to 6.20 percent for the comparable periods.
Provision for Losses on Loans. There was no provision for losses on loans
made for either of the three month comparable periods. Provision or adjustment
entries are made based on the Internal Loan and Asset Review Policy. A review is
performed at least quarterly to determine the adequacy of the current balance in
allowance for loss accounts. Loans delinquent ninety days or more were $574,000
at September 30, 2000 compared to $990,000 at June 30, 2000. Non-performing
loans to total loans at September 30, 2000 were 0.48 percent compared to 0.83
percent at June 30, 2000. The allowance for loan losses to non-performing loans
was 39.4 percent at September 30, 2000 compared to 22.8 percent at June 30,
2000. The allowance to total loans was 0.19 percent at September 30, 2000 and at
June 30, 2000. Montgomery is continually re-evaluating the level of the
allowance for loan losses as the amount of non-residential mortgage loans and
other new loan products are offered.
Non-Interest Income. Montgomery's other income for the three months ended
September 30, 2000, totaled $36,000 compared to $28,000 for the three months
ended September 30, 1999, an increase of $8,000, or 28.1 percent. During the
comparable periods, service charges on deposit accounts increased $2,000 due to
an increase in the number of demand deposit accounts and other income increased
$6,000.
MONTGOMERY FINANCIAL CORPORATION AND SUBSIDIARY
Crawfordsville, Indiana
Non-Interest Expense. Montgomery's other expenses for the three months
ended September 30, 2000 totaled $742,000, compared to $713,000 for the three
months ended September 30, 1999, an increase of $29,000, or 4.0 percent.
Salaries and employee benefits increased $53,000 primarily due to an increase in
personnel to accommodate growth. Net occupancy expense increased $4,000 and
equipment expense decreased $5,000. Data processing expense decreased $7,000.
The 1999 period included $8,000 related to Year 2000 testing. Advertising
expense decreased $5,000 primarily due to the increased advertising in the 1999
period to promote the opening of the Lafayette office operation. Other expenses
decreased $4,000 for the three months ended September 30, 2000 compared to the
same 1999 period. Included in other expenses on the 1999 period was
approximately $5,000 in expense related to customer awareness of the Y2K issue.
Income Tax Expense. Income tax expense for the three months ended September
30, 2000 was $55,000 compared to $122,000 for the three months ended September
30, 1999, due to the change in taxable income.
<PAGE>
MONTGOMERY FINANCIAL CORPORATION AND SUBSIDIARY
Crawfordsville, Indiana
Part II. OTHER INFORMATION
Item 1. Legal Proceedings None.
--------------------------
Item 2. Changes in Securities and Use of Proceeds None.
--------------------------------------------------
Item 3. Defaults Upon Senior Securities None.
----------------------------------------
Item 4. Submission of Matters to a Vote of Security Holders None.
------------------------------------------------------------
Item 5. Other Information None.
--------------------------
Item 6. Exhibits and Reports on Form 8-K
-----------------------------------------
(a) Exhibits
27. Financial Data Schedule
(b) Reports on Form 8-K
Montgomery filed no reports on Form 8-K during the quarter ended
September 30, 2000.
<PAGE>
MONTGOMERY SAVINGS, A FEDERAL ASSOCIATION
Crawfordsville, Indiana
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Montgomery Financial Corporation
Date: November 10, 2000 By: /s/ J. Lee Walden
-----------------------------------------
J. Lee Walden, President and Chief
Executive Officer
Date: November 10, 2000 By: /s/ Steven V. Brier
-----------------------------------------
Steven V. Brier, Vice President and Chief
Financial Officer
